Toll Brothers Earnings: Here’s Why Shares are Down Now

Toll Brothers Inc. (NYSE:TOL) delivered a profit and met Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 1.39%.

Toll Brothers Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 27.78% to $0.26 in the quarter versus EPS of $0.36 in the year-earlier quarter.

Revenue: Rose 24.33% to $689.2 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Toll Brothers Inc. reported adjusted EPS income of $0.26 per share. By that measure, the company met the mean analyst estimate of $0.26. It missed the average revenue estimate of $695.52 million.

Quoting Management: Douglas C. Yearley, chief executive officer, stated: “Sales volumes and pricing power both increased this quarter from one year ago, a pattern consistent with recent quarters. We believe the recovery is real and we are in the early stages of the rebound. Our average sales contracts per community are about where they were in 1997-1998, several years into the previous cyclical recovery. From there, over the next seven years, through August 2005, a period when mortgage rates averaged between 5.8% and 8.1%, sales contracts per community continued to increase, eventually peaking at twice that pace.”

Key Stats (on next page)…

Revenue increased 33.57% from $516 million in the previous quarter. EPS increased 85.71% from $0.14 in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.34 to a profit $0.38. For the current year, the average estimate has moved up from a profit of $0.79 to a profit of $0.81 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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